Wealthy nations pledge record release of 400 million barrels of oil from emergency reserves

A group representing many of the world's wealthiest countries agreed Wednesday to release the largest volume of emergency oil reserves in its history, in a bid to counter the effects of the Iran war on energy markets and the halt of cargo shipping through the Strait of Hormuz.

The Paris-based International Energy Agency said it will make 400 million barrels of oil available from its members’ emergency reserves, which is more than double the 182.7 million barrels that the IEA's 32 member countries released in 2022 in response to Russia’s full-scale invasion of Ukraine.

"This is a major action aiming to alleviate the immediate impacts of the disruption in markets,” IEA executive director Fatih Birol said.

"But, to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.”

Iran has attacked commercial ships across the Arabian Gulf in response to US and Israeli strikes, escalating a campaign of squeezing the oil-rich region as global energy concerns mount and effectively stopping cargo traffic in the narrow Strait of Hormuz, through which about a fifth of all oil is shipped from the Arabian Gulf toward the Indian Ocean.

Iran has also targeted oil fields and refineries in Gulf Arab nations, aiming to generate enough global economic pain to pressure the US and Israel to end their strikes.

According to the IEA, export volumes of crude and refined products are currently at less than 10% of prewar levels.

Birol noted that the situation in natural gas markets is also very challenging, with Asia the most severely affected region.

"Global energy supply has been reduced by around 20%."

The IEA's announcement came a day after energy ministers from the Group of Seven - the leading industrialized nations of Canada, the United States, France, Italy, Japan, Germany and Britain - met in Paris to look at ways to bring down prices.

Associated Press